The Pacific commercial advertiser. [volume] (Honolulu, Hawaiian Islands) 1885-1921, 1887-01-08

THE CURRENCY QUESTION IN THE
UNITED STATES.

or the present We have settled the
Hawaiian currency on the basis of gold
standard, limiting the circulation of sill
yer certificates to $50, 900, with all other
outstanding Treasury certificates redeem
able in gold. This should be satisfact-
DRY to those who maintain that gold
alone should possess the quality of
money as medium of circulation and
exchange. But a similar settlement or
compromise would hardly satisfy COM
munities whose business and trading
necessities are of much more extended
and complicated character. The cur
rency question is gathering greater in
terest yearly in the United States. The
problem which now faces American f.
nanciers is how to carry on the national
banking system and repay the public
debt, the National Bank circulation be-
ing secured by United States bonds de-
posted in the National Treasury, against
which deposit 80 per cent is issued in
notes.
The National Bank circulation being
thus dependent upon maintaining fixed
bond reserve it follows that it must be
contracted almost in the ratio of national
debt payment. 1t was found convent
ent as well as profitable to deposit per
cent bonds as guarantee for bank cir
culation, but this source of supply will
soon be exhausted. There are consid-
erably over 1906, GOO 600 in bank notes
in circulation throughout the States,
while of the 3 per cent loan of 1882 the
outstanding bonds only aggregate $64,
,030. 1t is quite evident t5at the Se,-
tary ef the thlse TEeeasag5ssw viii issue calls
r these bonds during 1887, unless Coz :
'ess countermands the redemption |!
)licy, which has done SO much to |
rengthen the credit of the United |
States in the financial world. We do |
not think that this is at all likely TO |
happen, however. The 8 per cents will |
be called up for redemption to a GER |
inty, but it is doubtful if Congress will |
compel the National Banks to deposit |
Their 4 per cent bonds due in 1907, or
y
calIed per cents, for the reason that the
4 3 per cents mature three years hence,
and must then be paid or cease to bear
terest, and are now quoted at over 10 |
per cent premium in the open market,
while the 4 per cents, having longer
lie, are selling at a premium of nearly
30 per cent 1t would not be prudent
financial operation to lock up these
bonds to secure note circulation on a
Isis of 10 per cent discount of their face
yslue.
Unless, therefore, Congress devises
some plan whereby the National |.
Banks can guarantee their circulation
without exhausting their legitimate
banking profit, these institutions must,
IL the course of a few years, sur
e transact business as banks of
sue. Various plans have been pro-
posed to that end by successive Secre-
aries of the Treasury and Controllers of
tae Currency, but none of these COM
U ended itself to the business intelligence
Jt ne County. AhcS were promulgated
III the interest OF the banks, and were of
too grasping nature to be accepted bv
the public. One proposition was. that
the Secretary of the Treasury should re-
ceive bonds and issue 90 per cent of their
value in notes at the date of deposit in
stead of for their par value.
Of course this proposal could not be
seriously entertained by Congress, al
though put forward and supported by
the entire banking interest of the State.
Ne yertheIess something must be done ii
the national banking system is to be
It has been proposed on
the other side to substitute national cur
rencv for the bank notes. There are
some $346, O00,O 900 United States legal
tender notes in circulation, and If this
plan be adopted that amount would ne
.essarily be increased by the sum of the
etired bank circulation. The question j
$ one surrounded with difficulty from
whatever side it may be viewed, and we
re inclined to doubt whether it will